“DESPAIR,” scrawled economist Joseph Schumpeter in large letters across a page in his diary. His third wife, Elizabeth, had just been diagnosed with cancer, and he was so distraught that he contemplated killing himself. His suicidal musings had little to do with wild ideas about romantic love; rather, it was “irrational to continue to live” — in his words — without the woman who carefully tended to his mental health. Save for the keen Elizabeth, Schumpeter’s acquaintances failed to perceive the depression with which the kindly, brilliant, outwardly cheerful professor contended.

Schumpeter’s masterful dissembling — his despondency was well hidden behind a sturdy facade of wittiness and ebullience — makes stitching together his public and private lives a difficult, delicate task. To resolve this challenge in “Prophet of Innovation: Joseph Schumpeter and Creative Destruction,” business historian Thomas McCraw trains an almost surgical focus on the noted intellectual, who died in 1950. In his attempt to form Schumpeter’s experiences and scholarship into one coherent “whole,” the biographer fits his subject’s existence into an intriguing, though ultimately unconvincing, framework.

Mr. McCraw cogently elucidates, and centers his theory around, the economist’s notion of capitalism. Schumpeter thought that without constant change, a capitalist economy would simply collapse. Innovation provides the impulse for Schumpeter’s capitalist tumult — demolishing livelihoods, businesses and industries in the short run, but powering economic growth in the longer term.

According to Mr. McCraw, this capitalist “creative destruction” reflects Schumpeter’s chaotic condition: “For every episode of destruction that he endured, he tried to convert his experience into a recreation or reinvention of some aspect of economics.” Mr. McCraw employs Schumpeter’s concept of “vision” — a gut feeling that guides an academic’s work — to bridge the gap between the esteemed scholar and the profoundly broken man.

Mr. McCraw plainly lays out this supposed connection when he compares the lives and works of Schumpeter and his intellectual rival, Cambridge economist and public servant John Maynard Keynes. Keynes had a settled, comfortably aristocratic existence in England, and therefore could envision the Great Depression as the product of a stagnant, static capitalism. Schumpeter, on the other hand, “had lived in nine cities and five countries” by 1937.

While it is easy to accept that Schumpeter’s experiences allowed him to understand the motivations of entrepreneurs he studied, Mr. McCraw goes a step too far here. If the relationship between experiences and scholarship is so straightforward, why did Schumpeter approve of capitalism’s dynamism when the up-and-downs of his own life caused him so much misery?

Mr. McCraw’s example glosses over a more complex reality: The mind is more than a switchboard that connects experiences to actions and beliefs; the distorting filter of personality lies between. While experiences shape personality, personality also determines how these experiences will manifest themselves in an individual’s thought processes. So the supposedly close link between Schumpeter’s life and his impressions of capitalism remains mere speculation.

In the end, however, this authorial construct does not detract from the lively portrait Mr. McCraw sketches. Schumpeter’s unflagging dedication to his scholarship was one of the few constants in a tumultuous life, which Mr. McCraw depicts in colorful, compelling detail. The economist’s academic reputation continued on an ever-upward trajectory, but his personal fortunes fluctuated wildly. Before his marriage to his second wife, Annie, Schumpeter had been an arrogant, rakish womanizer. After Annie’s death, the stricken Schumpeter sustained himself on sorrowful routine, placing roses on her well tended grave and obsessively re-copying her diary.

The scholar also managed his grief by keeping a grueling work schedule (he graded his weekly productivity) and by writing prayers to Annie and his beloved mother, both of whom died in 1926. Schumpeter had already suffered professional crises — he failed miserably as both a banker and Austria’s finance minister — but it was the personal tragedies of 1926 that profoundly unsettled him.

In the early 1930s, the scholar moved to the United States to teach at Harvard, which he soon came to regard as a “professorial monkey cage.” He felt stifled by Harvard’s bureaucracy, overwhelmed by self-doubt, overshadowed by Keynes and rejected for his outside-the-mainstream opinions on political questions. Consumed by personal demons, Schumpeter rarely took satisfaction in his towering intellectual accomplishments.

Mr. McCraw rightly notes that the continued relevance of Schumpeter’s insights — not only in economics, but also in history, political science and sociology — qualifies him as an “intellectual innovator.” As a man who supposedly aspired “to be the greatest economist in the world, the greatest horseman in Austria, and the best lover in Vienna,” the ambitious, unconventional and sometimes self-assured Schumpeter could certainly identify with the innovators he analyzed, Mr. McCraw observes.

Fortunately, Schumpeter’s talent for economics rivaled his talent for seduction, so his bold ideas never became irrelevant, even though Schumpeter’s contemporaries showed more enthusiasm for Keynesian economics.

Yet Mr. McCraw persuasively argues that Schumpeter’s ideas are still critical to understanding capitalism, especially in light of the economic upheavals wrought by globalization and information technology. In fact, the seemingly breakneck pace of innovation that marks today’s global economy makes Schumpeter’s thoughts more relevant.

It is difficult to resist the temptation to link the scholar’s theories about capitalism’s creative destruction to his tempestuous life — and Mr. McCraw succumbs. But even though the seams on Mr. McCraw’s “whole” Schumpeter are showing, “Prophet of Innovation” is an immensely entertaining read.